UPDATE June 28, 2013: I continue to love my 2012 11" Air. It's my main computer, super speedy, almost unbelievably thin and light, no problems of any kind.
You probably know that Apple has updated the Airs with much better battery life; the 2013 model of the 11" Air is rated at 9 hours, compared to 5 for the 2010-2012 models. This is huge. If you can afford it, get the 2013 model.
But if you do most of your work plugged in, or have a tight budget, you can now get the 2012 model at a discount. It is still a great computer, and, other than the battery life improvement, the 2013 model is little changed from the 2012 model.
UPDATE Oct 26, 2012: For about four months, my 11" Air has been my main computer. I am just as happy with it now as the day I got it. Battery life has consistently been close to the 5 hours Apple claims, sometimes more. Performance is consistently blazingly fast, and traveling with the Air is a dream (2.4 pounds and super thin instead of 4-6 pounds for a regular laptop). No scratches on the aluminum body or display. No problems of any kind. If my Air was lost or stolen, I would buy the same one again without thinking about it. Here's my original review:
The 11" 2012 Air is a winner in my opinion. It offers absolutely excellent performance and it is amazingly portable despite having a comfortable full-sized keyboard and an excellent display. The design is beautiful and build quality is exceptional.
I ordered my 2012 11" Macbook Air the day it was introduced, received it a few days later, and have used it intensively since. I also own a 13" late 2010 model MB Air, which was my main computer until getting this one.
The 2012 Air's SSD is literally more than twice as fast as the SSDs in the 2010 and 2011 model Airs. The new ivy bridge processors are more than twice as fast as the core 2 duo's in the 2010 Airs and about 20% faster than the sandy bridge processors in the 2011 Air. Compared to my 2010 Air, the 2012 Air flies and makes the 2010 Air seem very sluggish.
The new ivy bridge processors are faster yet less power-hungry than the processors in the 2010 and 2011 Airs, which makes for a small but appreciated improvement in battery life according to independent published benchmarks. I've had my Air for 4 months now, and I'm getting pretty close to the 5-hour battery life that Apple promises, sometimes more. I usually have the screen brightness at 50% and the keyboard backlight down to the lowest setting (but not off).
This is my first computer with USB 3.0 ports. I have been blown away by transfer speeds to my USB 3.0 flash drive and a 2TB external hard drive. (My other USB peripherals are USB 2.0, so I don't notice any difference with them.)
I used bootcamp to install Windows 7 and some Windows-only software I need for work. Booting into Windows and running Windows natively is a noticeably better experience on this new Air than on the Lenovo Windows laptop that I used to have at my job.
For people who don't have an Apple TV and want to play their Air through a home theater system, it's very helpful that the 2012 Air now has HDMI audio pass-through. This means that a single HDMI cable can transmit video and audio from your Air to your home theater system or television set. (Though, you still need the HDMI adapter because the Air still doesn't have its own HDMI port. But the adapter is pretty inexpensive.) The 2010 Air (and maybe the 2011 Air?) could only pass video through the HDMI cable, so you'd need separate audio cables for sound. I have run my new Air through my home theater and watched a few SD and HD programs I downloaded with iTunes, and it worked really great - setup was very easy and sound and picture were very good. I really appreciate this because I recently ditched cable and now depend on iTunes, Hulu+, and similar internet services for my TV needs.
If you have a 2010 Air and can afford it, upgrading to a 2012 Air is a no-brainer. The performance is vastly better, plus there are many small but meaningful improvements (backlit keyboard, HDMI audio pass-through, USB 3.0, better Facetime webcam).
If you have a 2011 Air, the case for upgrading is weaker. Compared to the 2011 Airs, the 2012 Airs have fewer improvements and the performance gain is much less dramatic (the main exception being the much faster SSD).
If you're trying to decide between an Air and a 13" Macbook Pro: The Air is way thinner and lighter than the Pro, so it's much nicer to travel with. The Air's display has higher resolution than the Pro's. The Air's SSD blows away the Pro's sluggish 5400 rpm hard drive. On the other hand, the Pro's display has richer colors and wider viewing angles. The Pro has a built-in optical drive; this is important to some people, but many of us rarely use them anymore and cheap external drives work very well with the Air. The Pro's processor is more powerful (though most people will find the 2012 Air's processor to have more than adequate power and speed). A couple months ago, my employer replaced the Lenovo Thinkpad in my office with a new 13" Macbook Pro. My 11" Air is much faster than the Pro. I usually bring my Air to work every day and often don't even turn on the Pro. If you're trying to decide between an Air and a Pro, visit your local retailer and compare them in person. It's really a tradeoff between the Pro's built-in optical drive and rich (but low-res) display and the Air's incredibly thin and light form factor and blazing SSD.
If you're trying to decide between an 11" and 13" Air, the main tradeoff in my opinion is battery life vs. portability. Battery life is rated at 5 hours in the 11" Air, 7 hours in the 13" Air. This is a big difference for people who regularly do a lot of computing away from a power outlet. The difference won't be as important for people who mostly do their computing near a power outlet (I'm in that category). On the three trips I've taken since getting my 11" Air, I've found the 5-hour battery life to be enough for me to get a ton of work done on the flight plus have juice left to watch a pre-downloaded movie or TV episode. And I can't overstate how wonderful it is to travel with such an incredibly thin and light yet powerful computer. Plus, TSA doesn't require you to remove the 11" Air from your laptop bag at airport security (though you ARE required to remove a 13" Air, go figure). But some people really need those extra couple hours of battery life; if you're one of them, get a 13" Air, it's still amazingly thin and light (just not quite as much as the 11" Air).
Another difference between the 11" and 13" Airs is the display, of course. The 13" is not just bigger, it also has higher resolution. For me, this wasn't a factor in my decision because when I'm not traveling, most of the time I plug my Air into an external 22" or 24" monitor, so the built-in display is less important to me than it might be to you. When it's not plugged in to an external monitor, I am perfectly happy with the 11" display (even though I was used to a 13" display on my previous Air). But you might be happier with the 13" display's higher resolution--to be sure, see both models side by side at your local retailer.
Differences between the speed and performance of the 11" and 13" Airs are small enough that most people won't notice them. Even the cheapest 11" Air feels as fast as the 13" Air for most tasks. And both models can be upgraded with more ram, a faster processor, and bigger SSDs at time of purchase.
In fact, if you want any of these upgrades, you should get them at the time of purchase, since most of them cannot be upgraded post-purchase. Here are some recommendations:
There are three things that can be upgraded: SSD, RAM, and processor. SSD in my opinion is most urgent. The processor and RAM in the cheapest model will be adequate for most users, but the 64GB SSD will not. Paying $100 extra to increase the SSD from 64GB to 128GB should be a no-brainer for all but the most liquidity-constrained purchasers. If you can afford it, get the 256GB SSD. If you can afford the 256GB SSD and still have money left, then upgrade to 8GB of RAM.
In the comments, someone noted that the RAM is not user-upgradable post-purchase but the SSD is. This is true. However, upgrading the SSD post-purchase is very expensive, the Air is not designed to be user-serviceable, and opening up your Air may void your warranty. So, for most people, it will be better to buy the Air with the biggest SSD you can afford at the time of purchase.
One thing I don't recommend is AppleCare. Some of you will disagree and I respect your opinions, but here's mine in case it might help you decide:
It's certainly true that AppleCare will save a few people a lot of money. But the average person won't get their 250 dollars worth from AppleCare--otherwise Apple wouldn't make money off it. When I bought my 2010 Air, I let the Apple salesperson talk me into AppleCare, and I haven't used it once. The only good thing about it in my case is that AppleCare transfers to the next owner, and there's over 1 year left on it, so I can use it as a selling point when I put my 2010 Air up for sale.
But I didn't buy AppleCare with my 2012 Air. If there's a defective part, it'll most likely fail during the standard warranty period. If something fails after the standard 1-year warranty, the repair cost would have to be over $250 to make the AppleCare worthwhile. For me, the decision comes down to this: do I want to part with $250 for sure right now, or am I willing to accept a very small risk of losing even more after a year from now?
Of course, some people are particularly risk averse and will appreciate having the peace of mind. And there are some people who really will get their money's worth, and for them, AppleCare is a life-saver. But for most of us, it will end up being a money-loser.
Whether you get AppleCare or not, I strongly recommend the 2012 Macbook Air, and for many of you, the amazing portability of the 11" model will be the better choice.